Eight UK housebuilders face probe over ‘anti-competitive behaviour’

The Competition and Markets Authority (CMA) has opened an investigation into eight of the UK’s biggest housebuilders having uncovered evidence that some housebuilders may be engaging in “anti-competitive behaviour”.

This morning the CMA published the results of a year-long study into the UK housebuilding market, which revealed that complex and unpredictable planning rules are behind persistent shortfalls in the delivery of new homes.

As part of the study, the regulator said it had found evidence indicating alleged breaches of competition law by Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry.

The report suggests these housebuilders “may be sharing commercially sensitive information with their competitors” to “influence the price and build-out of new homes”.

The CMA warns that such activity may “weaken competition in the market”.

Sarah Cardell, chief executive of the CMA, said: “The CMA has also today opened a new investigation into the suspected sharing of commercially sensitive information by housebuilders which could be influencing the build-out of sites and the prices of new homes.

“While this issue is not one of the main drivers of the problems we’ve highlighted in our report, it is important we tackle anti-competitive behaviour if we find it.”

News of the investigation had an immediate impact on the stock market, with Taylor Wimpey’s share price down 2.8%, Persimmon dropping 2.4%, Vistry’s share price falling 1.7%, Barratt down 1.6% and Berkeley down 1.1%.

The CMA report blames a combination of the planning system and the limits of speculative private development for the persistent under-delivery of new homes. There were fewer than 250,000 homes built last year across Great Britain, falling well below the 300,000-homes target for England alone.

The report found two-fifths of homes built between 2021 and 2022 were delivered by the largest, national housebuilders while more than 50,000 homes were delivered by thousands of smaller, regional builders.

Around 60% of all houses built in 2021-22 were delivered by speculative private development – and the report suggests that a reliance on this model “has seen the gap widen considerably between what the market will deliver and what communities need”.

The CMA also suggests that private developers produce houses at a rate at which they can be sold without needing to reduce their prices, rather than, for example, providing more affordable housing.

>> See also: Barratt Redrow deal ‘signals sector’s confidence over CMA inquiry’

>> See also: Barratt and Redrow profit down on day merger between pair announced

The CMA’s report also revealed a “growing trend” for estate management charges, with 80% of new homes sold by the 11 biggest builders in 2021-22 subject to these fees.

It warned too that housebuilders do not have strong incentives to compete on quality and its analysis suggests that a growing number of homeowners are reporting a higher number of snagging issues (at least 16).

A substantial minority of new homeowners are experiencing “particularly serious” problems, such as collapsing staircases or ceilings.

The CMA’s report makes several recommendations, including establishing a new homes ombudsman “as soon as possible, and setting a single mandatory consumer code so homeowners can better pursue homebuilders over any quality issues they face”.

It also recommends requiring councils to adopt amenities on all new housing estates and the introduction of enhanced consumer protections for homeowners on existing privately managed estates – including making it easier for homeowners to switch to a more competitive management company.

Marc Vlessing, chief executive of Pocket Living, said: “This report says what we all knew. The housebuilding sector isn’t working and isn’t delivering the new homes we need.

“I now urge the chancellor to act quickly in next week’s Budget and urgently implement moves to support the SME housebuilding sector, which has seen numbers fall significantly since the 1980s, as well as go further and faster on planning reform.”

A Bellway spokersperson said: “We are reviewing the CMA’s report. Bellway has engaged and co-operated fully with the CMA throughout its market study - and will continue to do so.”

A spokesperson from Bloor Homes, said: “We have been transparent with the CMA throughout the year-long study and are currently reviewing the findings. We will continue to work with them throughout the course of the investigation.”

Taylor Wimpey’s spokesperson said: “The CMA’s report identifies proposed changes to the market that we welcome, particularly around the planning process and recognition that housebuilders do not landbank. Taylor Wimpey notes the investigation opened today and we will cooperate fully with the CMA in relation to this.”

Housing Today has made efforts to contact Barratt, Berkeley, Persimmon, Redrow, and Vistry for comment.